How are Mutual Funds Taxed? – Fincash Support

The taxation rules in Mutual Funds are different for equity funds and debt funds. So, the rules of taxation for both of them are as follows.

Equity Funds:

Equity Schemes	Holding Period	Tax Rate
Long-Term Capital Gains (LTCG)	More than 1 Year	10% (with no indexation)*
Short-Term Capital Gains (STCG)	Less than or Equal to a Year	15%
Tax on Distributed Dividend		10%*#

*Gains up to INR 1 lakh are free of tax. Tax at 10% applies to gains above INR 1 lakh. Earlier rate was 0% cost calculated as closing price on Jan 31, 2018. #Dividend tax of 10% + Surcharge 12% + Cess 4% =11.648% Health & Education Cess of 4% introduced. Earlier, education Cess was 3%

Debt Funds:

Debt Schemes	Holding Period	Tax Rate
Long-Term Capital Gains (LTCG)	More than 3 Years	20% after indexation
Short-Term Capital Gains (STCG)	Less than or Equal to 3 Years	Personal Income Tax rate
Tax on Distributed Dividend		25%#

#Dividend tax at 25% + Surcharge 12% + Cess 4% = 29.12% Health & Education Cess of 4% introduced. Earlier education Cess was 3%

To know more, read here: https://www.fincash.com/l/mutual-fund-taxation-india